Crossrider plc

Annual Report and Accounts 2016 

Digital Distribution Platform

 Crossrider is an online distribution and
digital product company. The Company
provides best-in-class internet security
products. Crossrider’s vision is to deliver
its customers digital goods which provide
a private, secure and superior online
experience.

See more online at

investors.crossrider.com

Contents

Strategic report Financials

Highlights01 Independent auditor’s report to
Chairman’s statement 02 the members of Crossrider plc 21
Chief Executive Officer’s review 04 Consolidated statement of
comprehensive income 22
Chief Financial Officer’s review 07
Consolidated statement of
Principal risks and uncertainties 10
financial position 23
Consolidated statement of changes
Governance in equity 24
Consolidated statement of cash flows 25
Corporate governance 12
Notes to the consolidated
Board of Directors 14 financial statements 26
Remuneration Committee report 16 Shareholder information and advisers IBC
Directors’ report 18
Directors’ responsibility statement 20
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Crossrider plc
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01

Highlights ››Completed
restructuring –
››Acquisition of
DriverAgent to
2016 realising $2m in
annualised savings
expand product
offering
››Refocused the ››Significant progress
business to made against our
establish two strategic plan
core segments:
Media and App
Distribution

$56.5m
Revenue

$6.4m
Adjusted EBITDA

$72.1m
$7.9m
Cash and cash equivalents

Adjusted cash from

operations

123%
Conversion of
Adjusted EBITDA
02 Crossrider plc
Annual Report and Accounts 2016

Chairman’s
statement

2016 has been a year of both change and progress for Crossrider.
In June, we commenced a major restructuring to streamline our business
and simplify our reporting structure going forward. The Company’s
restructuring has resulted in achieving significant cost reductions and
enabled us to pursue a new strategic direction, focused on expanding
our digital distribution platform.

2016 has been a year of both change
and progress for Crossrider. In June, we
commenced a major restructuring to
streamline our business and simplify our
reporting structure going forward. The
Company’s restructuring has resulted
in achieving significant cost reductions
and enabled us to pursue a new strategic
direction, focused on expanding
our digital distribution platform.
Strengthening the Board
In May of this year, Crossrider announced
the appointment of Ido Erlichman as
Chief Executive Officer (‘CEO’). Ido’s
appointment has been pivotal in reshaping
Additionally, Crossrider has appointed
Moran Laufer as Chief Financial
Officer (‘CFO’). Moran has been a key
member of the finance team since
2012 and successfully supported
the Group’s admission to AIM.
In the short space of seven months,
our management team has already been
able to implement significant strategic
change and we believe it is a very exciting
time in the Company’s transformation.

720,000
our business as we transition from a pure
Don Elgie
ad-tech business to a leading software
Non-Executive Chairman and digital distribution platform.

Ido has in-depth understanding of the Paying customers

market in which we operate and brings
significant experience in the technology
sector garnered through roles in private
equity, consulting and finance and past
experience in his previous CEO role
with turning around Visual DNA.
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New strategic direction
The strategic overhaul of Crossrider
has resulted in stable growth in our
areas of focus – the App Distribution
Division and the Media Division. Since the
beginning of 2016 we have been winding
down our operations in the Web Apps
vertical and management is now solely
focused on our two core divisions.
Crossrider anticipated a decline in the
Web Apps sector due to changes in the
market environment. As a result, the
Company shifted its focus away from the
Web Apps sector in the period, including
the browser extension platform, which
has been outsourced through a licensing
agreement since January 2016. We expect
the year to 31 December 2017 to be the
last year of reporting for this segment.
Crossrider plc
Annual Report and Accounts 2016

03
28.3%
Segment margins
Foundation for growth
Crossrider continues to capitalise on
opportunities consistent with our strategic
vision and is confident in the Company’s
ability to accelerate the growth trajectory
of its digital distribution platform,
particularly through acquisitions.
The Company’s expansion in this sector
started successfully with the acquisition of
DriverAgent in October. Crossrider has now
completed the integration of DriverAgent
and anticipates its contribution to revenue
and earnings to materialise in the coming
year. Importantly, this acquisition has
proven the efficacy of our platform. The
Board expects to deliver further growth
in this division through larger synergistic
acquisitions in the coming year.
We now feel we have a solid foundation
in place from which we can drive future
growth and continue to strengthen
and expand the business.
The significant progress made by the Group
in the course of the year would not have
been possible without the talented and
dedicated Crossrider team who continue to
be key in executing on our strategic plan.
Don Elgie
Non-Executive Chairman
13 March 2017
04 Crossrider plc
Annual Report and Accounts 2016
Chief Executive
Officer’s review
2016 has been a transformational year for Crossrider, during which the
Company has successfully executed a three-step strategic plan to reposition
the business as a leading software and digital distribution platform.
2016 has been a transformational
year for Crossrider, during which the
Company has successfully executed a
three-step strategic plan to reposition
the business as a leading software
and digital distribution platform.
Having restructured the business, the
Board believes the Company is now ideally
placed to capitalise on opportunities to
grow organically through investment in our
in-house capabilities and through selective
acquisitions. The Group’s reshaped
operations are focused on combining
our strong digital media capabilities
with our growing digital product
Ido Erlichman platform, with a particular emphasis
on serving the cyber security arena.
Chief Executive Officer
In the course of the year, management’s
primary challenge was to restructure
and strengthen the Company’s core
operations and we are pleased to report
that we have been able to achieve
$2.0 milllion in annualised savings as a
result of this process and, in addition,
establish two core business divisions
– App Distribution and Media.
Evolving our business model to
an online distribution and product hub
Strong technology Online distribution Online products
Leveraging tech Using distribution Expanding product
capabilities capabilities portfolio
Secondly, management was focused on
achieving organic growth in these core
divisions and we are delighted that our
App Distribution segment has achieved
20 per cent growth in the period while
our Media division has remained stable.
The third component of our strategy
was to lay the foundations for future
expansion through bolt-on and strategic
acquisitions, building on our existing
and refined business model. We have
successfully executed on this, announcing
in October the highly synergistic
acquisition of DriverAgent, a leading
device driver search and update service,
and we continue to actively assess
acquisition opportunities in 2017.
We have also taken further steps to
strengthen our cash-generative activities,
improving working capital discipline
while still providing quality service to
all of our customers and partners,
which has resulted in an increase in
the cash generated from operations.
All of the initiatives that have been
implemented are in support of our
strategic decision to expand our
existing digital distribution platform
and extend our product offering,
particularly in the cyber security space.
Online digital product
distribution company
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App Distribution
App distribution product hub,
generating revenues from end users
purchasing digital products online
In the App Distribution division we
are now offering two main products:
Reimage computer repair software
and service, and the DriverAgent driver
repair software and service. We have
720,000 paying subscribers around
the world. Our top three markets
are the US, UK and Germany.
In the last year we have strengthened our
platform so it now provides an unrivalled
and enhanced customer experience
and lifetime value, further improving our
customer service metrics. We believe
Commenced the execution
of our M&A strategy
Business model
transformation
Larger strategic
M&A
Smaller bolt-on M&A
e.g. DriverAgent
that this provides us with a competitive
advantage in the marketplace and a strong
foundation from which to expand both our
product offering and geographic reach.
In addition, we now have better control
over our distribution, as we have initiated
the process of bringing our customer
service in-house, which allows us to
improve the quality of our processes. We
have also bolstered our in-house media
buying capabilities enabling us to diversify
our media sources, resulting in increased
traffic volume, quality and market share.
We expect these changes to extend
customer lifetime value, enable margin
consolidation and improve customer
retention, thereby increasing profitability.
• Portfolio of products
• User base
• Products to expand
the portfolio
• Technology supporting the
distribution funnel
M&A is vital to achieve critical scale
Crossrider plc
Annual Report and Accounts 2016

05
In October, we announced the acquisition
of DriverAgent, which is designed for use
with desktop computers, tablets and mobile
devices, to identify outdated drivers. This
acquisition was highly complementary
to our existing App Distribution hub and
is now fully integrated into the Group.
The DriverAgent acquisition demonstrates
our progress in successfully expanding our
portfolio through our digital product hub
and we continue to look to expand this
vertical, predominantly through acquisition
and third-party strategic partnerships.
• Immediate earnings
• Strong growth trajectory
• Scale
• Add immediate value
• Tactical deals to enhance
organic growth
06 Crossrider plc
Annual Report and Accounts 2016
Chief Executive Officer’s review
continued
“The acquisition of
the DriverAgent was
highly complementary
to our existing App
Distribution platform”
Media
Marketing technology platforms and ad
agency activities, generating revenue
through agreements with media partners
In the Media division we work with
companies primarily in Europe and provide
them with end-to-end media and advertising
technologies services. These include media
buying, ad agency technologies and services
and ad serving technologies as well as
programmatic video buying capabilities.
In this division, we have expanded
our foothold in the evolving media and
advertising space by leveraging our strong
mobile capabilities. We have successfully
entered new markets and broadened
our current offering into the native, social
and content distribution channels.
We continue to develop our advertising
technologies and supporting tools
to address the constantly evolving
marketplace and ensure we optimise
our technologies for our media buying
services. This is all consistent with our
Company-wide strategy to maintain
best-in-class online distribution
funnels for our digital products.
Current trading and outlook
This year we have made significant
progress in the turnaround of the
business, reducing our cost base and
realigning our strategic priorities. We
believe these significant changes have
repositioned the Company, enabling us to
complete the turnaround and grow our
core divisions in the medium-term. The full
impact of the turnaround and subsequent
benefits will be realised in the coming year.
In 2017, while we will continue to drive
organic growth opportunities, we will also
focus on strategic acquisitions designed to
broaden our exposure to SaaS revenues,
mainly in the cyber security vertical.
We are currently exploring the viability
of a number of companies, evaluating
them along the following criteria:
›› Sizeable and growing user base
›› Recurring revenue sales model
›› Strong technological team
›› Ability to deliver strong synergies with
both the Group’s media capabilities and
digital distribution platform
We have made a strong start to 2017 and
will continue to drive profitability and
long-term future growth for the Group.
Ido Erlichman
Chief Executive Officer
13 March 2017
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Crossrider plc
Annual Report and Accounts 2016

07

Chief Financial
Officer’s review

Crossrider remains highly cash-generative. During the

period, App Distribution improved in margins significantly.

Overview
Revenue in the year to 31 December 2016 decreased to $56.5 million (2015: $84.6 million)
and Adjusted EBITDA to $6.4 million (2015: $10.1 million). The decrease is attributable to
the Board’s decision to cease investment in the Web Apps platform and outsource its
monetisation to a third party. Excluding the Web Apps segment, revenue at $52.0 million
is lower in comparison to $57.6 million in 2015. However, segment results have significantly
increased, at $14.7 million (2015: $12.9 million) and margins have also increased at
28.3 per cent (2015: 22.4 per cent).

Crossrider remains a highly cash-generative business, with an increase of $1 million in

cash generated from operations after adjusting for one-off non-recurring items of $7.9
million (2015: $6.9 million). This represents adjusted cash conversion of 123 per cent,
compared to 69 per cent in 2015. The Group’s balance sheet remains strong with cash
of $72.1 million at 31 December 2016 (31 December 2015: $71.3 million) and no debt.

During the period, the Group went through a major restructuring, resulting in changes
to its management reporting system and now operates three reportable segments:
Moran Laufer
Chief Financial Officer ›› App Distribution – comprising the Group’s desktop app distribution platform;
›› Media – comprising the Group’s marketing technology platforms and ad network
activities; and
›› Web Apps and License – comprising revenue generated from licensing the Web Apps
monetisation platform and associated technology.

Consequently, the previous period segmental results have been restated. The results of
these segments are set out below.

Segment result

Revenue Segment result

Restated Restated
2016 2015 2016 2015
$’000 $’000 $’000 $’000

App Distribution 38,241 37,229 11,267 9,414

Media 13,783 20,426 3,480 3,499
Web Apps and License 4,508 26,980 4,508 13,611
Revenue 56,532 84,635 19,255 26,524

The segment result has been calculated using revenue less costs directly attributable to
that segment. Cost of sales comprises commissions paid to publishers and payment
processing fees. Direct sales and marketing costs comprise traffic acquisition costs.
08 Crossrider plc
Annual Report and Accounts 2016

Chief Financial Officer’s review

continued

App Distribution At the beginning of 2016, the board decided to outsource the
monetisation of its Web Apps platform to a third party. In light of
2016 2015
this shift in this part of the Group’s business model the Group
$’000 $’000
ceased its media acquisition in this segment. Revenue in the
Revenue 38,241 37,229 period is comprised of consideration for license of the platform
Cost of sales (2,360) (1,854) and its associated technology. The year to 31 December 2017 is
Direct sales and marketing costs (24,614) (25,961) expected to be the last year of reporting for this segment as the
Segment result 11,267 9,414 technology license contracts are expiring on September 2017.
Segment margin 29.5 25.3
Adjusted EBITDA
Adjusted EBITDA for the year to 31 December 2016 was
During the period, App Distribution improved in margins $6.4 million (2015: $10.1 million). Adjusted EBITDA is a non-GAAP
significantly, reaching 29.5 per cent compared to 25.3 per cent in Company-specific measure which is considered to be a key
the comparable period, resulting in a $1.9 million increase in the performance indicator for the Group’s financial performance. It
segment result. This represents a 20 per cent uplift. The margin excludes share-based payment charges and expenses which are
improvement is attributable to two main drivers: improved media considered to be one-off and non-recurring in nature and are
buying efficiency resulting in better traffic quality as well as user excluded from the following analysis:
targeting and secondly, an improvement in customer retention
and upselling to existing customers. 2016 2015
$’000 $’000

In October 2016, Crossrider completed the acquisition of Revenue 56,532 84,635

DriverAgent, a driver repair and update software product, for a Cost of sales (2,360) (7,388)
consideration of $1.2 million. Direct sales and marketing costs (34,917) (50,723)
Segment result 19,255 26,524
Media
Indirect sales and marketing costs (4,265) (3,016)
2016 2015 Research and development costs (1,299) (2,539)
$’000 $’000 Management, general and administrative
Revenue 13,783 20,426 costs (7,278) (10,905)
Direct sales and marketing costs (10,303) (16,927) Adjusted EBITDA 6,413 10,064
Segment result 3,480 3,499
Segment margin % 25.25 17.13 Operating loss
A reconciliation of Adjusted EBITDA to operating loss is provided
as follows:
In the Media division, revenues have decreased by 32.5 per cent
and segment results have remained stable compared to 2015. 2016 2015
The decrease in revenues is attributable to two low margin $’000 $’000
contracts with high working capital requirements that were signed Adjusted EBITDA 6,413 10,064
in the fourth quarter of 2015 and terminated in 2016 to improve Employee share-based payment charge (716) (3,407)
cash flow and decrease risk. If these contracts were to be excluded Exceptional and non-recurring costs (862) (1,957)
the segment results would have shown an increase of circa Depreciation and amortisation (9,884) (9,370)
11.9 per cent from a base of $3.1 million in 2015. This increase is Impairment of intangible assets (4,683) (9,132)
attributable to an expansion in new territories and verticals, mainly
Operating loss (9,732) (13,802)
mobile app distribution.

Web Apps and License Exceptional and non-recurring costs in FY2016 comprised
non-recurring staff restructuring costs of $0.6 million and a $0.3
2016 2015
million one-time onerous contract written-off in the period. The
$’000 $’000
decrease in the employee share-based payment charge is due to
Revenue 4,508 26,980 reversal of charges from previous periods for employees that left
Cost of sales – (5,534) the Company during the year.
Direct sales and marketing costs – (7,835)
Segment result 4,508 13,611
Segment margin % 100 50.45
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Crossrider plc
Annual Report and Accounts 2016

09

Impairment of intangible assets Financial position

The intangible assets related to the acquisition of the Definiti ad
network in 2014 are allocated to the Group’s Media segment and
are considered to be a separate cash generating unit (‘CGU’) for the
purpose of assessing carrying values. Following regulatory changes
in the mobile subscription vertical in which Definiti operates,
management now forecasts modest growth in advertising volumes
from the Definiti ad network over the coming years. The carried
value of the intangible assets of the Definiti ad network CGU have
therefore been reassessed, resulting in a goodwill impairment of
$4.7 million being recognised in the year (2015: $nil).
Loss before tax
Loss before tax was $10.0 million (2015: $14.7 million).
At 31 December 2016, the Group had cash of $72.1 million
(31 December 2015: $71.3 million), had net assets of $80.5
million (31 December 2015: $91.5million) and is debt free.
At 31 December 2016, trade receivables were $5.6 million
(31 December 2015: $13.0 million) which represented 44 days
outstanding (31 December 2015: 52 days).
Moran Laufer
Chief Financial Officer
13 March 2017

Loss after tax

Loss after tax was $10.7 million (2015: $17.6 million). The tax charge
derives mainly from Group subsidiaries, residual profits. The Group
continues to recognise a deferred tax asset of $0.2 million (2015:
$0.7 million) in respect of tax losses accumulated in previous years.

Cash flow

2016 2015
$’000 $’000

Cash flow from operations 5,922 5,910

Exceptional and non-recurring costs 1,951 995
Adjusted cash flow from operations 7,873 6,905
% of Adjusted EBITDA 123% 69%

Cash flow from operations was strong at $7.9 million (2015:

$5.9 million). Adjusted cash flows from operations after adding
back acquisition payments treated as remuneration and payments
that are one-off in nature, was $7.9 million; this represents an
improvement in cash conversion to 123 per cent of Adjusted
EBITDA, from 69 per cent in 2015.

Tax paid in the period was $0.9 million (2015: $1.8 million).

Cash spent in the period on capital expenditure of $0.8 million

(2015: $1.8 million) mainly comprises capitalised development
costs and purchase of fixed assets. Cash payments in respect
of previous acquisitions totalled $1.4 million (2015: $1.4 million).
The Company paid $0.9 million (2015: $0.1 million) in respect of
the acquisition of the DriverAgent software business. As a result,
net cash outflow from investing activities was $3.0 million (2015:
$3.2 million).

The share buy-back programme, announced in November 2015,

was completed in January 2016, returning $1.0 million to
shareholders in 2016 (2015: $5.1 million).
10 Crossrider plc
Annual Report and Accounts 2016

Principal risks
and uncertainties

There are a number of potential risks and uncertainties

that could have a material impact on the Group’s long-
term performance and could cause results to differ
materially from expected and historical results. The risks
to which the business is exposed are set out below:

Risks Background Mitigating controls

Regulatory, legislative or
self-regulatory developments
regarding internet privacy
matters could adversely
affect the Group’s ability
to conduct its business.
International regulatory bodies are increasingly focused
on online privacy issues and, in particular, on online
advertising activities that use cookies and other online
tools to track users. Certain internet browsers, such as
Safari, automatically block cookies, and users are also
able to adjust their internet browser settings to block or
delete cookies. In addition, many jurisdictions have also
begun to implement legislation requiring advertisers
and digital media sources to allow users to set their
cookie preferences independently of such settings.
››All the information that the Group
obtains regarding users and their
profiling is information that may
correspond to a particular person,
account or profile, but does not identify,
allow contact or enable Crossrider
to locate the person to whom such
information pertains. As a consequence,
the Group is not regulated by any
regulator or subject to any regulatory
approval for its day-to-day operations.

››While not externally regulated,

the Group adheres to a strict set of
controls with its partners. Partners,
developers, publishers and advertisers
are required to comply with these
contractually-imposed controls,
which have been jointly created by
the Group and its legal advisers.

Large and established
internet, antivirus and
technology companies may
be able to significantly impair
the Group’s ability to operate.
Large and established internet, antivirus and ››The Group actively monitors the
technology companies such as Adobe Systems developments of the large and
Incorporated, Symantec Corporation, Amazon.com, established internet, antivirus and
Inc. (‘Amazon’), AOL Inc., Apple, eBay Inc., Facebook, technology companies to identify
Inc. (‘Facebook’), Google, Microsoft and Yahoo! Inc. any threats that may impair the
may have the power to significantly change the very Group’s ability to operate.
nature of the app distribution and internet display
advertising marketplace; these changes could materially
disadvantage the Group. For example, Amazon, Apple,
Facebook, Google and Microsoft have substantial
resources and control a significant share of widely
adopted industry platforms such as web browsers,
mobile operating systems and advertising exchanges
and networks. Changes to their web browsers, mobile
operating systems, platforms, exchanges, networks or
other products or services could be significantly harmful
to the Group’s business. Such companies could also
seek to replicate all or parts of the Group’s business.
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Annual Report and Accounts 2016

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Risks Background Mitigating controls

If the Group fails to innovate
and respond effectively
to rapidly changing
technology, the Group’s
solution may become less
competitive or obsolete.
To remain competitive, the Group’s future success ››The Group invests in research
will depend on its ability to continuously enhance and development resources to
and improve its solutions to meet client needs, add ensure that the Group’s technology
functionality to advertiser and publisher platforms platforms are continually enhanced
and address technological advancements. For through evolution and innovation.
example, as e-commerce and consumption of content
continues to migrate from the web to mobile and ››The Group also invests in acquisitions
tablet devices and advertisements more frequently to expand its technology platforms
include video or incorporate animation, sound and/ and adapt to the rapidly changing
or interactivity (rich media content), businesses technology environment.
are increasingly demanding that internet display
advertising solutions extend to all three screens and
support video and rich media content. In addition,
as consumers spend more time watching videos and
playing social network games online, as opposed
to browsing static webpages, businesses may
increasingly shift their advertising budgets to video
and game publishers or, if consumers fail to engage
with advertisements displayed on smaller screens,
reduce their internet display advertising budgets.

Failures in the Group’s IT
systems and infrastructure
supporting its solution
could significantly disrupt
its operations and cause
it to lose clients.
In addition to the optimal performance of the
Crossrider Engine, the Group’s business relies on
the continued and uninterrupted performance of its
software and hardware infrastructures. The Group
currently places over 1.8 billion advertisements per
day and each of those advertisements is placed in
milliseconds. Sustained or repeated system failures
of its software and hardware infrastructures, which
interrupt its ability to deliver advertisements quickly and
accurately, its ability to serve and track advertisements
and its ability to process consumers’ responses to
those advertisements, could significantly reduce the
attractiveness of its solution to advertiser clients and
publishers, reduce its revenue and affect its reputation.
››The Group outsources hosting services,
holding minimal server infrastructure
itself. This allows the Group to flex
and grow its operations efficiently.
››Crossrider uses third party content
distribution network services in
order to offload traffic served
directly from its own infrastructure
and minimise network latency.

The Group is a multinational
organisation faced with
increasingly complex tax
issues in many jurisdictions,
and it could be obliged
to pay additional taxes in
various jurisdictions as a
result of new taxes, laws
or interpretation, including
sales taxes, which may
negatively affect its business.
As a multinational organisation, operating in multiple ››The Group uses advisers to review its
jurisdictions such as the Isle of Man, Cyprus, Israel, tax position and ensure compliance
Romania and the United Kingdom, the Group may with local tax legislation.
be subject to taxation in several jurisdictions around
the world with increasingly complex tax laws, the
application of which can be uncertain. The amount
of taxes it pays in these jurisdictions could increase
substantially as a result of changes in the applicable
tax principles, including increased tax rates, new tax
laws or revised interpretations of existing tax laws
and precedents, which could have a material adverse
effect on its liquidity and results of operations.
12 Crossrider plc
Annual Report and Accounts 2016
Corporate governance
The Board of Directors of the Company (the ‘Board’)
is responsible for the Group’s system of
corporate governance.
Overview
The current policies and procedures as adopted by the Group are
set out below.
Role of the Board
The Board is responsible for the overall strategy and direction of
the Group. It provides robust leadership of the Company within a
framework of effective controls which enables risk to be assessed
and managed. The Board, in setting the Company’s aims, ensures
that the necessary financial and human resources are in place to
meet its objectives. It regularly reviews management performance
and upholds the Company’s values and standards so that its
obligations to shareholders and others are understood and met.
The Board is supplied with information in a quality form and in a
timely manner to enable it to discharge its duties. The Board also
reviews arrangements under which employees can raise concerns
in confidence about possible improprieties in matters of financial
reporting or other areas.
Division of responsibilities
During 2016, the Chairman, Donald (Don) Elgie had a clear and
distinctive responsibility for running the Board while the executive
responsibility for running the Company’s business was delegated to
the Chief Executive Officer, Ido Erlichman, when he was appointed
on 31 May 2016. When Koby Menachemi, the former Chief
Executive Officer, announced his intention to resign in January
2016, Don Elgie fulfilled the temporary role of Executive Chairman
from 1 February 2016 until the appointment of Ido Erlichman, after
which he reverted to the Non-Executive Chairman role.
Moran Laufer was appointed to the Board on 6 February 2017,
having been appointed to the position of Chief Financial Officer on
27 October 2016.
As at 31 December 2016, the Board comprised four Directors,
three of whom were Non-Executive Directors.
The Non-Executive Directors normally do not have any day-to-day
involvement in the running of the business but are responsible for
scrutinising the performance of management in meeting agreed
goals and objectives and monitoring the reporting of performance.
All Board members are considered to be able to allocate sufficient
time to the Company to discharge their responsibilities as
Directors effectively.
The Board meets at regular scheduled intervals and follows a
formal agenda; it also meets as and when required. No one
individual has unfettered powers of decision. The Directors may
take independent professional advice at the Group’s expense.
Board committees
The Group has an Audit Committee, a Nominations Committee,
and a Remuneration Committee, each consisting of three Non-
Executive Directors. Each committee has written terms of
delegated responsibilities which will be available for review at
the end of the Annual General Meeting for 2017 and which are
available for review in the Investor Relations section of the Group’s
website www.crossrider.com. The Board and its committees are
considered to have the appropriate balance of skills, experience,
independence and knowledge of the Company to enable them to
discharge their respective duties and responsibilities effectively.
Remuneration Committee
The Remuneration Committee is comprised of David Cotterell
(Chair of the Committee), Don Elgie and Martin Blair, all of
whom are Non-Executive Directors. It is responsible for making
recommendations to the Board on remuneration policy as
applied to the Company’s Executive Directors. The Remuneration
Committee also considers grants of options under the Company’s
share option schemes. The policy of the Remuneration Committee
is to grant share options to employees as part of a remuneration
package to motivate them to contribute to the growth of the
Group over the medium to long-term.
The Chief Executive Officer may, at the Remuneration Committee’s
invitation, attend meetings, except where his own remuneration is
discussed. The Remuneration Committee met three times during
the past financial year. The Remuneration Committee’s terms of
reference, which can be found on the Company’s website
www.crossrider.com, are reviewed on an annual basis and
updated as required.
The Remuneration Committee report, which includes details of
Directors’ remuneration, pension entitlements and Directors’
interests, together with information on service contracts, is set
out on pages 16 to 17.
Audit Committee
The Audit Committee is comprised of Martin Blair (Chair of the
Committee), David Cotterell and Don Elgie, all of whom are
Non-Executive Directors.
The Committee meets at least twice a year and at other times
as agreed between the members of the Committee. Executive
Directors and the Group’s auditors may be invited to attend all or
part of any meetings. The Committee also meets with the Group’s
external auditors without the presence of the Executive Directors.
The Committee’s terms of reference, which can be found on the
Company’s website www.crossrider.com, are reviewed on an
annual basis and updated as required.
 STRATEGIC
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Crossrider plc
Annual Report and Accounts 2016

13

Risk management and internal controls
During the year, the Audit Committee has reviewed the scope
and effectiveness of systems to identify and address financial and
non-financial risks. The review identified the key risks, risk control
measures and the implementation status of the risk control
measures. The report was presented to the Committee by the
Chief Financial Officer.
Audit of the Group’s Annual Report Financial Statements
In advance of the audit of the Group’s Annual Report and Financial
Statements, the Audit Committee reviewed the plan as presented
by the Group’s external auditor, BDO LLP. The plan set out the
proposed scope of work, audit approach, materiality and identified
areas of audit risk.
›› Advising the Board on any areas where further recruitment may
be appropriate; and
›› Succession planning for key executives at Board level and below.
Where necessary and appropriate, recruitment consultants are
used to assist the Committee in delivering its objectives and
responsibilities. The Committee leads the process for the
identification and selection of new Directors and makes
recommendations to the Board in respect of such appointments.
The Committee also makes recommendations to the Board on
membership of its committees. The Committee’s terms of
reference, which can be found on the Company’s website
www.crossrider.com, are reviewed on an annual basis and
updated as required.

The Audit Committee also reviewed the Annual Report and

Financial Statements along with the audit findings report
presented by BDO LLP.

Auditor independence
The Audit Committee monitors the independence of the Group’s
external auditor. During the year BDO LLP provided the Group
with the following non-audit services:

›› Taxation compliance services; and

›› Taxation advisory services.

The Audit Committee considered the threats to the independence

of BDO LLP created by the provision of the non-audit services and
concluded that sufficient safeguards were in place.

BDO was appointed as auditor of the Group for the year ended
31 December 2013. The Audit Committee will keep under review, in
consultation with major shareholders, the decision as to whether to
conduct a tender in respect of the audit in line with the
recommendations of the Financial Reporting Council.

Nominations Committee
The Nominations Committee is comprised of Don Elgie (Chair of
the Committee), Martin Blair and David Cotterell, all of whom are
Independent Non-Executive directors. The Committee meets
when appropriate and considers the composition of the Board,
retirements and appointments of additional and replacement
Directors and makes appropriate recommendations to the Board.
The objective of the Committee is to review the composition of the
Board and to plan for its progressive refreshing, with regard to
balance and structure. The Committee is responsible for:

›› Reviewing the structure of the Board;

›› Evaluating the balance of skills, knowledge, experience and
diversity of the Board;
14 Crossrider plc
Annual Report and Accounts 2016
Board of Directors
Don Elgie
Non-Executive Chairman
Background and experience
Don retired as Group CEO of Creston plc (LSE: CRE), a marketing
services company which is listed on the Main Market, at the end
of March 2014. He founded Creston plc, a digitally-focused
communications and insight group, in 2001, and built it into
an international group which generated £75 million revenue,
£12 million EBITDA and employed over 800 people as at March
2014. Don has many years’ experience in marketing services
including developing companies organically and by acquisition.
He is Chairman of the Company’s Nominations Committee.
Ido Erlichman
Chief Executive Officer
Background and experience
Ido joined Crossrider plc in May 2016 as Group Chief Executive
Officer. Ido has more than nine years’ experience in the technology
sector garnered through roles in private equity, consulting and
finance. Prior to joining Crossrider, Ido was acting joint chief
executive officer of VisualDNA (which was acquired by The Nielsen
Company), a leading psychographic data business, where he led its
geographic expansion and oversaw significant EBITDA growth.
Prior to VisualDNA, Ido also worked as a senior associate within
KPMG’s private equity deal advisory practice in London and as a
senior manager within KPMG’s Transaction Services practice
focusing on technology deals in Israel and with the Israeli Ministry
of Finance. Ido is the author of the best-selling book ‘Battle of
Strategies’ published in Israel by Yediot Books. Ido is a Certified
Public Accountant, graduated magna cum laude in Accounting and
Economics from The Hebrew University of Jerusalem, obtained his
Masters degree in Law from Bar-Ilan University, and received an
MBA from the University of Cambridge’s Judge Business School.
 STRATEGIC
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GOVERNANCE STATEMENTS
David Cotterell
Non-Executive Director
Background and experience
David has over 25 years’ experience in the information technology
software and service sector. He has held senior management roles
with firms such as ACT Financial Systems, DST, Advent and SQS
Group plc and has led and successfully implemented two trade
sales of technology companies. Between 2006 and 2011 David
served as the CEO of UKIISA Region (UK, Ireland, South Africa and
India) and as board director at SQS Group plc (LSE: SQS). David is
currently non-executive chairman of RapidCloud Int plc (LSE: RCI)
and SyQic plc (LSE: SYQ). David sits on the remuneration and audit
committees of both companies. Additionally, David is chairman of
IT services company, Qualitest UK. David is Crossrider Group’s
Senior Independent Director and also Chairman of the Company’s
Remuneration Committee.
Crossrider plc
Annual Report and Accounts 2016

15
Martin Blair
Non-Executive Director
Background and experience
Prior to joining the Board of Crossrider, Martin acted as CFO of
Pilat Media Global plc, a company previously admitted to trading
on both AIM and the Tel Aviv Stock Exchange, which developed,
marketed and supported new generation business management
software solutions for content and service providers in the media
industry. Martin joined Pilat Media in 2001, ahead of its admission
to AIM in 2002. Pilat Media was acquired by SintecMedia Ltd for
£63.3 million in April 2014. Martin qualified as a chartered
accountant with Ernst & Young in 1982 and between 1983 and
1986 worked for PwC. He then joined the mail order and retail
company, Freemans plc, and later moved into the media sector as
director of finance & administration and then as vice president of
United International Pictures Limited, between 1988 and 1996.
Martin is Chairman of the Company’s Audit Committee.
16 Crossrider plc
Annual Report and Accounts 2016

Remuneration Committee
report (Unaudited)

The Remuneration Committee (for the purpose of the Remuneration Committee report, the ‘Committee’) is comprised of David Cotterell
(Chair of the Committee), Don Elgie and Martin Blair, all of whom are Non-Executive Directors.

The Directors (other than alternate Directors) shall be entitled to receive by way of fees for their services as Directors (in addition to fees
paid for employment or executive services) such sum as the Board may from time to time determine, provided that such amount shall
not exceed in aggregate £500,000 per annum or such greater sum as the Company in general meeting shall from time to time determine
by ordinary resolution. Any fees payable shall be distinct from any salary, remuneration or other amounts payable to a Director.

Each Director is entitled to be repaid all reasonable travelling, hotel and other expenses properly incurred by him in or about the
performance of his duties as a Director, including any expenses incurred in attending meetings of the Board or any committee of the
Board or general meetings or separate meetings of the holders of any class of shares or of debentures of the Company.

Directors’ emoluments
Directors’ emoluments for the 2016 financial year are set in Pounds Sterling. These are set out in the tables below along with the
US Dollar equivalent cost to the Company:

Base salary/fees Benefits Pension Bonus Total

Name GBP£ GBP£ GBP£ GBP£ GBP£

Ido Erlichman 176,154 24,074 5,285 58,333 263,846

Don Elgie 156,295 – – – 156,295
David Cotterell 50,000 – – – 50,000
Martin Blair 53,938 – – – 53,938

Base salary/fees Benefits Pension Bonus Total

Name GBP£ GBP£ GBP£ GBP£ GBP£

Koby Menachemi 61,250 16,940 3,063 – 81,253

Mark Carlisle 96,155 1,217 4,758 – 102,130

The US Dollar equivalent cost to the Company has been calculated using a USD/GBP rate of 1.24:

Base salary/fees Benefits Pension Bonus Total

Name $ $ $ $ $

Ido Erlichman 218,423 29,852 6,553 72,333 327,161

Don Elgie 193,806 – – – 193,806
David Cotterell 62,005 – – – 62,005
Martin Blair 66,883 – – – 66,883

Benefits include the living allowance paid to Koby Menachemi as he was required to relocate from Israel on his appointment.

The beneficial interests of the Directors who held office at 31 December 2016, together with that of persons connected with the
Directors, in the share capital of the Company were as follows:

Directors’ interests in shares

2016 2015
Percentage Percentage
of issued Number of of issued Number of
Name share capital ordinary shares share capital ordinary shares

Ido Erlichman 0.07% 100,000 – –

Don Elgie 0.07% 97,087 0.07% 97,087
Martin Blair 0.01% 19,417 0.01% 19,417
David Cotterell 0.03% 48,544 0.03% 48,544
 STRATEGIC
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GOVERNANCE STATEMENTS
Crossrider plc
Annual Report and Accounts 2016

17

Directors’ interests in share options

Number of Number of
ordinary shares ordinary shares
under option at under option at
31 December 31 December
Name 2015 Date of grant Exercise price 2016

Ido Erlichman 0 1 June 2016 £0.275 2,000,000

Note: Vesting schedule: 25% one year from date of grant of 1 June 2016 and then in 12 equal quarterly instalments thereafter.

Annual bonus
The bonuses for the Executive Directors for 2017 will be based on Adjusted EBIDTA and non-financial and strategic objectives. The level
of bonus payable by reference to the financial performance of the Company will be determined on a sliding scale based on the
Company’s budget for the forthcoming financial year.

Service contracts
Executive Directors
The service agreements of the Executive Directors are for an indefinite term and provide for formal notice of six months to be served
to terminate the agreement, either by the Company or by the Director. In addition to their annual salaries, the Executive Directors are
entitled to annual pension contributions of 3 per cent as well as other benefits commensurate with their positions, including health,
related benefits.

Non-Executive Directors
Fees for Non-Executive Directors are set with reference to time commitment, the number of committees chaired and relevant external
market benchmarks. In addition to covering travel expenses, the Remuneration Committee has approved additional fees of £1,750 per
day to be paid to Non-Executive Directors for additional time commitments outside of those agreed upon their appointment up to a
maximum of 20 days. During the year, Don Elgie was paid for 11.5 additional days and Martin Blair was paid for 2.25 additional days. The
Committee also approved additional compensation of £14,042 per month to be paid to the Non-Executive Chairman for his increased
role in the Company during the recruitment of a new Chief Executive Officer. Don Elgie was paid for 4 months’ additional compensation.

The Non-Executive Directors each have specific letters of appointment, rather than service contracts. Non-Executive Directors are
appointed for an initial term of three years and, under normal circumstances, would be expected to serve for additional three-year terms,
up to a maximum of nine years, subject to satisfactory performance and re-election at the Annual General Meeting as required.

David Cotterell
Chairman, Remuneration Committee
13 March 2017
18 Crossrider plc
Annual Report and Accounts 2016
Directors’ report
The Directors present their Annual Report on the affairs of the
Group, together with the financial statements and independent
auditor’s report for the year ended 31 December 2016. The
corporate governance statement set out on pages 12 to 13
forms part of this report.
The Company’s full name is Crossrider plc, domiciled in the Isle
of Man with company number 011402V. Crossrider plc is a public
listed company, listed on the Alternative Investment Market (‘AIM’)
of the London Stock Exchange.
Principal activity
The principal activity of the Group is online digital product
development and distribution and the provision of software
platforms to the digital advertising industry. A detailed overview
of the Group’s activities is set out on pages 4 to 6.
Review of business and future developments
Details of the Group’s performance during the year under review
and expected future developments are set out in the strategic
report on pages 1 to 11. A description of the principal risks and
uncertainties facing the Group is set out on pages 10 to 11.
Dividends
The Directors do not recommend the payment of a dividend (2015:
$nil). The declaration and payment by the Company of any future
dividends on the ordinary shares will depend on the results of the
Group’s operations, its financial condition, cash requirements,
future prospects, profits available for distribution and other
factors deemed to be relevant at the time.
The Board recognises the importance of dividend income to
shareholders and intends to adopt, at the appropriate time, a
progressive dividend policy to reflect the expectation of future
cash flow generation and long-term earnings potential of the
Company. However, it is not the current intention of the Board to
declare any dividends in the near-term. The Board may revise the
Company’s dividend policy from time to time in line with the actual
results of the Company.
Directors
The Directors who served during the period were as follows:
Ido Erlichman Active, appointed 31 May 2016
Donald (Don) Elgie Active
David Cotterell Active
Martin Blair Active
Yakov (Koby) Menachemi Resigned 31 March 2016
Mark Carlisle Resigned 19 August 2016
Re-election of Directors
The articles of association require that at each Annual General
Meeting one third of the Directors (excluding any Director who has
been appointed by the Board since the previous Annual General
Meeting) or, if their number is not an integral multiple of three, the
number nearest to one third but not exceeding one third, shall
retire from office (but so that if there are fewer than three Directors
who are subject to retirement by rotation, one shall retire).
Any Director who is not required to retire by rotation but who has
been in office for three years or more since his appointment or his
last reappointment or who would have held office at not less than
three consecutive Annual General Meetings of the Company
without retiring, shall retire from office.
Appointment of a Director
The articles of association require that any Director appointed by
the Board shall, unless appointed at such meeting, hold office only
until the dissolution of the Annual General Meeting of the
Company next following such appointment.
Directors’ responsibility statement
The statement of Directors’ responsibility is set out on page 20.
Directors’ indemnities
The Directors have been granted an indemnity from the Company
to the extent permitted by law in respect of liabilities incurred as a
result of their office which remains in force at the date of this report.
Employee policies
At 31 December 2016, the Group employed 74 people,
(31 December 2015: 93 people). The Group is committed to
attracting and retaining personnel with the requisite technical skills
and experience to implement its growth strategy and maintain its
position in the competitive industry in which it operates. Crossrider
therefore places significant emphasis on ensuring that it has a
strong recruitment team as well as appropriate remuneration and
bonus policies which are set by reference to appropriate objectives
and include share-based incentive schemes, details of which are
set out in note 18 to the financial statements.
Financial instruments
The Group does not currently use derivative financial instruments.
A summary of the Group’s financial instruments, changes in share
capital and related disclosures are set out in notes 15 and 17 to the
financial statements. The Group has no material exposure to price,
liquidity or cash flow risk that would impact its objectives.
Capital structure
Under the IOM Companies Act, the Company is not required
to have an authorised share capital. The ordinary shares in issue
at 31 December 2016 have been created pursuant to the BVI
Companies Act and the articles of association of the Company in
place prior to the re-domiciliation of the Company from the BVI to
the IOM on 13 August 2014 and are ordinary shares of USD 0.0001
par value.
STRATEGIC
REPORT
CORPORATE FINANCIAL
GOVERNANCE STATEMENTS
 Crossrider plc
Annual Report and Accounts 2016

19

Details of the issued share capital as at 31 December 2016 of
148,496,073 ordinary shares of USD 0.0001 par value, together
with details of the movements in the Company’s issued share
capital during the year, are shown in note 15 to the financial
statements. The Company has one class of ordinary shares,
which carry no right to fixed income. Each share carries the right
to one vote at general meetings of the Company.
Annual General Meeting
The Annual General Meeting for 2017 will be held at the offices
of BLP, Adelaide House, London Bridge, London EC4R 9HA on
Thursday 18 May 2017 at 12:00 noon. The notice convening the
Annual General Meeting for this year, and an explanation of the
items of non-routine business, are set out in the circular that
accompanies the Annual Report.

There are no specific restrictions on the size of a holding nor on Auditor

the transfer of shares, which are both governed by the general
provisions of the articles of association and prevailing legislation.
Save as provided by the terms of certain lock-in agreements
entered into between the Company, the Directors and certain
shareholders, the Directors are not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights.
As at 31 December 2016 the Company held 7,451,423 shares in
treasury and no shares in the capital of the Company are held by
or on behalf of the Company or by any of the Company’s
subsidiaries.
A resolution to reappoint BDO LLP as the Company’s auditor will
be proposed at the 2017 Annual General Meeting.
Each of the persons who is a Director at the date of approval of
this Annual Report confirms that:
›› So far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
›› The Director has taken all the steps that he ought to have taken
as a Director in order to make himself aware of any relevant
audit information and to establish that the Company’s auditor is
aware of that information.

Details of employee share schemes are set out in note 18 to the Signed on behalf of the Board by:
financial statements.
Don Elgie
Political and charitable donations Non-Executive Chairman
The Company made no political or charitable donations during the
13 March 2017
year (2015: $nil).

Related party transactions

Details of all related party transactions are set out in note 21 to the
financial statements.

Research and development

The Group maintains an integrated global research and
development team which has a staff of 14 (2015: 32). In the opinion
of the Directors, continuity of investment in this area is essential for
the maintenance of the Group’s market position and for future
growth. The amount of research and development costs capitalised
in the year was $744,000 (2015: $1,593,000).

Going concern
The Directors, having considered the Group’s resources
financially and the associated risks with doing business in
the current economic climate, believe the Group is capable of
successfully managing these risks. The Board has reviewed the cash
flow forecast and business plan as provided by management which
includes the rate of revenue growth, margins and cost control. As
such, the Directors are satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis
in preparing these financial statements.
20 Crossrider plc
Annual Report and Accounts 2016

Directors’ responsibility
statement

The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Isle of Man company law does not require the Directors to prepare
financial statements for each financial year, however the Group is
required to do so to satisfy the requirements of the AIM rules.
Under company law, when preparing the financial statements, the
Directors are required to prepare the Group financial statements
in accordance with an appropriate set of generally accepted
accounting principles or practice. The Directors have elected to
use International Financial Reporting Standards (‘IFRSs’) as
adopted by the European Union.
The Directors are responsible for keeping adequate accounting
records that correctly explain the transactions of the Company,
enable the financial position of the Company to be determined
with reasonable accuracy at any time and allow financial
statements to be prepared. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. The Directors’ responsibility also extends to the continued
integrity of the financial statements contained therein.

Under company law, the Directors must not approve the accounts Signed on behalf of the Board by:
unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the profit or loss of the Don Elgie
Company for that period. Non-Executive Chairman
13 March 2017
In preparing these financial statements, International Accounting
Standard 1 (revised) requires that Directors:

›› Properly select and apply accounting policies;

›› Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information;
›› Provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial
performance; and
›› Make an assessment of the Company’s ability to continue as a
going concern.
 STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL
STATEMENTS
Independent auditor’s report to the members of Crossrider plc
We have audited the financial statements of Crossrider plc for the
year ended 31 December 2016 which comprise the consolidated
statement of comprehensive income, the consolidated statement
of financial position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and the related
notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial
Reporting Standards (‘IFRSs’) as adopted by the European Union.
This report is made solely to the Company’s members as a body, in
accordance with our engagement letter dated 1 December 2016.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, and the Company’s members
as a body for our audit work, for this report, or for the opinion we
have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors’
responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
Isle of Man company law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the
Financial Reporting Council’s Ethical Standards for Auditors.
Crossrider plc
Annual Report and Accounts 2016

21
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to
the Company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all
the financial and non-financial information in the Annual Report
to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit.
If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on the financial statements
In our opinion, the financial statements:
›› Give a true and fair view of the state of the Group’s affairs as at
31 December 2016 and of its loss for the year then ended; and
›› Have been properly prepared in accordance with IFRSs as
adopted by the EU.
BDO LLP
Chartered Accountants
London
United Kingdom
13 March 2017
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
22 Crossrider plc
Annual Report and Accounts 2016

Consolidated statement of comprehensive income

For the year ended 31 December 2016

2016 2015
Note $’000 $’000

Revenue 4 56,532 84,635

Cost of sales (2,360) (7,388)
Gross profit 54,172 77,247
Selling and marketing costs (39,915) (54,146)
Research and development costs (1,661) (3,500)
Management, general and administrative costs (7,761) (14,901)
Depreciation and amortisation 10,11 (9,884) (9,370)
Impairment of intangible assets 10 (4,683) (9,132)
Total operating costs (63,904) (91,049)
Operating loss 6 (9,732) (13,802)
Adjusted EBITDA 6,413 10,064
Employee share-based payment charge 6 (716) (3,407)
Exceptional and non-recurring costs 6 (862) (1,957)
Depreciation and amortisation 10,11 (9,884) (9,370)
Impairment of intangible assets 10 (4,683) (9,132)
Operating loss (9,732) (13,802)
Share of results of equity accounted associates 47 (38)
Finance income 4 15
Finance costs 8 (332) (870)
Loss before taxation (10,013) (14,695)
Exceptional tax charge 9 – (2,200)
Tax charge 9 (665) (702)
Loss for the year (10,678) (17,597)
Other comprehensive income:
Foreign exchange differences on translation of foreign operations – 1
Total comprehensive income for the year (10,678) (17,596)
Basic earnings per share (cents) 19 (7.6) (11.9)
Diluted earnings per share (cents) 19 (7.6) (11.9)
 STRATEGIC
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FINANCIAL
STATEMENTS
Crossrider plc
Annual Report and Accounts 2016

23

Consolidated statement of financial position

As at 31 December 2016

2016 2015
Note $’000 $’000

Non-current assets
Intangible assets 10 7,113 19,254
Property, plant and equipment 11 591 1,003
Investments in equity accounted associates 16 859 812
Deferred tax asset 9 166 716
8,729 21,785
Current assets
Trade and other receivables 12 7,950 16,280
Cash and cash equivalents 13 72,064 71,336
80,014 87,616
Total assets 88,743 109,401
Equity
Share capital 14 14
Additional paid in capital 130,292 131,287
Retained earnings (49,753) (39,791)
Equity attributable to equity holders of the parent 80,553 91,510
Non-current liabilities
Deferred tax liabilities 9 691 986
Deferred consideration 24 160 184
851 1,170
Current liabilities
Trade and other payables 14 7,096 15,316
Deferred consideration 24 243 1,405
7,339 16,721
Total equity and liabilities 88,743 109,401

The financial statements were approved by the Board and authorised for issue on 13 March 2017.

Ido Erlichman Moran Laufer

Chief Executive Officer Chief Financial Officer
24 Crossrider plc
Annual Report and Accounts 2016

Consolidated statement of changes in equity

For the year ended 31 December 2016

Additional
Share paid in Retained
capital capital earnings Total
$’000 $’000 $’000 $’000

At 1 January 2015 15 136,399 (25,602) 110,812

Loss for the year – – (17,597) (17,597)
Other comprehensive income:
Foreign exchange differences on translation of foreign operations – – 1 1
Total comprehensive income for the year – – (17,596) (17,596)
Transactions with owners:
Share-based payments – – 3,407 3,407
Exercise of employee options (note 15) – 18 – 18
Purchase of own shares (note 15) (1) (5,130) – (5,131)
At 31 December 2015 14 131,287 (39,791) 91,510
At 1 January 2016 14 131,287 (39,791) 91,510
Loss for the year – – (10,678) (10,678)
Other comprehensive income:
Foreign exchange differences on translation of foreign operations – – – –
Total comprehensive income for the year – – (10,678) (10,678)
Transactions with owners:
Share-based payments – – 716 716
Purchase of own shares (note 15) – (995) – (995)
At 31 December 2016 14 130,292 (49,753) 80,553
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
FINANCIAL

STATEMENTS
Crossrider plc
Annual Report and Accounts 2016

25

Consolidated statement of cash flows

For the year ended 31 December 2016

2016 2015
Note $’000 $’000

Cash flow from operating activities

Loss for the year after taxation (10,678) (17,597)
Adjustments for:
Amortisation of intangible assets 10 9,421 8,974
Impairment of intangible assets 10 4,683 9,132
Depreciation of property, plant and equipment 11 463 396
Loss on sale of property, plant and equipment 11 35 –
Tax charge 9 665 2,902
Interest income (4) (15)
Interest expenses 8 51 210
Share-based payment charge 18 716 3,407
Share of results of associates 16 (47) 38
Unrealised foreign exchange differences 4 660
Operating cash flow before movement in working capital 5,309 8,107
Decrease/increase) in trade and other receivables 8,327 (2,529)
Decrease in trade and other payables (6,625) (631)
(Decrease)/increase in other current liabilities (1,089) 963
Cash flow from operations 5,922 5,910
Tax paid net of refunds (904) (1,826)
Cash generated from operations 5,018 4,084
Cash flow from investing activities
Purchases of property, plant and equipment 11 (108) (220)
Sale of property, plant and equipment 24 –
Net cash paid on business combination 24 (1,089) (902)
Intangible assets acquired (850) –
Net cash paid on investment in associates 16 (350) (500)
Capitalisation of development costs 10 (744) (1,593)
Net cash used in investing activities (3,117) (3,215)
Cash flow from financing activities
Net payment for purchase of own shares 15 (995) (5,131)
Net cash generated from financing activities (995) (5,131)
Net (decrease)/increase in cash and cash equivalents 906 (4,262)
Revaluation of cash due to changes in foreign exchange rates (178) (443)
Cash and cash equivalents at beginning of year 71,336 76,041
Cash and cash equivalents at end of year 13 72,064 71,336
26 Crossrider plc
Annual Report and Accounts 2016
Notes to the consolidated financial statements
1 Basis of preparation
The financial information provided is for Crossrider plc (‘the
Company’) and its subsidiary undertakings (together the ‘Group’)
in respect of the financial years ended 31 December 2016 and 2015.
The financial information has been prepared in accordance
with International Financial Reporting Standards, International
Accounting Standards and interpretations (collectively ‘IFRS’) as
adopted by the EU.
Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. They therefore continue to
adopt the going concern basis of accounting in preparing the
financial statements.
Adoption of new and revised standards
New standards and amendments to existing standards that
have been published and are mandatory for the first time for the
financial year beginning 1 January 2016 have been adopted but
had no significant impact on the Group.
New standards, amendments to standards and interpretations
have been issued but are not effective (and in some cases have
not yet been adopted by the EU) for the financial year beginning
1 January 2016 and have not been early adopted. A detailed impact
assessment has not been performed on the adoption of these
standards, therefore it is not known if adoption will have a material
impact on the financial information of the Group in future periods.
2 Significant accounting policies
Basis of consolidation
The Group consolidated financial statements comprise the
financial statements of the Parent Company Crossrider plc and the
financial statements of the subsidiaries as shown in note 20 of the
consolidated financial statements.
The Group has been partly formed from a series of common
control transactions.
The financial statements of all the Group companies are prepared
using uniform accounting policies. All transactions and balances
between Group companies have been eliminated on consolidation.
Business combinations and goodwill
Acquisitions of businesses not under common control are
accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition date fair values
of the assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity
interests issued by the Group in exchange for control of the
acquiree. Acquisition-related costs are recognised in profit or
loss as incurred.
At the acquisition date, the identifiable assets acquired and the
liabilities assumed are recognised at their fair value at the
acquisition date.
Goodwill is measured as the excess of the sum of the
consideration transferred and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any) over the net
of the acquisition date amounts of the identifiable assets acquired
and the liabilities assumed.
Contingent consideration that is classified as an asset or a liability
is initially recognised at fair value and subsequently at fair value
thorough profit and loss in accordance with IAS 39 as appropriate.
Consideration which is contingent on completion of a service
period by an employee of the Group is treated as remuneration
and is expensed over the service period.
Foreign currencies
(a) Presentational currency
Items included in the Group’s financial statements are measured
using the currency of the primary economic environment in which
each entity of the Group operates (the ‘functional currency’). The
financial statements are presented in United States Dollars ($’000).
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss. Exchange rate
gains and losses are recognised net within finance cost.
(c) Consolidation
The functional currency of the Company, and the presentation
currency for the consolidated financial statements, is United States
Dollars. For the purpose of the consolidated financial statements,
the assets and liabilities of the Group’s foreign operations with a
functional currency other than United States Dollars are translated
into United States Dollars using exchange rates prevailing on the
reporting date. Income and expense items (including comparatives)
are translated at the exchange rates at the dates of the transactions.
Exchange differences arising, if any, are recognised directly in equity.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
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2 Significant accounting policies continued
Merger accounting
Common control transactions have been accounted for using
merger accounting.
Under merger accounting, the assets and liabilities of both entities
are recorded at book value, not fair value (although adjustments
are made to achieve uniform accounting policies), intangible assets
and contingent liabilities are recognised only to the extent that
they were recognised by the legal acquiree in accordance within
applicable IFRS, no goodwill is recognised, any expenses of the
combination are written-off immediately to the income statement
and comparative amounts, if applicable, are restated as if the
combination had taken place at the beginning of the earliest
accounting period presented.
The result is that the merged groups are treated as if they had
been combined throughout the current and comparative
accounting periods.
Associates
Where the Group has the power to participate in (but not control)
the financial and operating policy decisions of another entity, it is
classified as an associate. Associates are initially recognised in the
consolidated statement of financial position at cost. Subsequently,
associates are accounted for using the equity method, where the
Group’s share of post-acquisition profits and losses and other
comprehensive income is recognised in the consolidated statement
of profit and loss and other comprehensive income (except for
losses in excess of the Group’s investment in the associate unless
there is an obligation to make good those losses).
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
goods and services provided in the normal course of business,
net of discounts, VAT and other sales-related taxes.
(a) Revenue from advertising
The Group generates revenues only when its customers’
advertising campaigns achieve certain predefined performance-
based and validated results such as cost per mille impressions
(‘CPM’), cost-per-acquisition (‘CPA’), cost-per-sale (‘CPS’), cost-per-
lead (‘CPL’), cost-per-download (‘CPD’) and cost-per-install (‘CPI’).
These revenues are recognised only when the amount of revenue
can be measured reliably, it is probable that the economic benefits
associated will flow to the Group, the transactions are complete
and the related costs can be measured reliably.
(b) Revenue from sale of software tools
Revenue from sales of software tools is recognised at electronic
point of sale when payment is identified by the respective credit
card payment processor and rights to use the software have
been granted.
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Annual Report and Accounts 2016

27
(c) Presentation of net revenues
Revenues are recognised net when it is identified that the Group
is acting as an agent and gross when it is identified that the Group
is acting as a principal in accordance with the terms of the
arrangement.
Intangible assets
Amortisation for all classes of intangible assets is included within
amortisation and depreciation costs in the income statement.
(a) Externally acquired intangible assets
Externally acquired intangible assets comprise intellectual
property (‘IP’), customer lists, trademarks and internet domains.
All such intangible assets are stated at cost less any accumulated
amortisation and any accumulated impairment losses.
Amortisation of these intangible assets is calculated using the
straight-line method over their useful economic lives.
Where intangible assets are acquired as part of a business
combination they are recorded initially at their fair value.
The useful economic life of IP, customer lists and trademarks is
three to five years.
Internet domains are generally considered to have an indefinite
useful economic life. They are purchased due to the marketability of
the related domain name, are not specific to a particular product,
brand, market or service and therefore are not expected to diminish
in value or use as a function of time.
An intangible asset is derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Gains or
losses arising from derecognition of an intangible asset, measured
as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in profit or loss
when the asset is derecognised.
(b) Internally generated intangible assets (development costs)
An internally generated intangible asset arising from the Group’s
e-business development is recognised only if all of the following
conditions are met:
›› An asset is created that can be identified (such as software and
new processes);
›› It is probable that the asset created will generate future
economic benefits; and
›› The development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-
line basis over their estimated useful lives, which is three to five
years. Amortisation commences when the asset is available for use.
Where no internally generated intangible asset can be recognised,
development expenditure is charged to profit or loss in the period
in which it is incurred.
28 Crossrider plc
Annual Report and Accounts 2016
Notes to the consolidated financial statements
continued
2 Significant accounting policies continued
An intangible asset is derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Gains or
losses arising from derecognition of an intangible asset, measured
as the difference between the net disposal proceeds and the
carrying amount of the asset, are recognised in profit or loss
when the asset is derecognised.
(c) Goodwill
Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. The Group tests goodwill annually for impairment, or more
frequently if there are indicators that goodwill might be impaired.
Intangible assets are tested separately from goodwill only where
impairment indicators exist.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on the straight-line method so as to
write-off the cost of each asset to its residual value over its estimated
useful life. The annual depreciation rates used are as follows:
›› Computer equipment: three years
›› Furniture, fixtures and office equipment: 6-15 years
›› Leasehold improvements: ten years or the term of the lease,
if shorter
The assets’ residual values and useful lives are reviewed and
adjusted, if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its
estimated recoverable amount, the asset is written-down
immediately to its recoverable amount.
Expenditure for repairs and maintenance of property, plant and
equipment is charged to profit or loss in the year in which it
is incurred.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment
is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or loss.
Impairment of property, plant and equipment and internally
generated intangible assets
Assets that have an indefinite useful life are not subject to
depreciation or amortisation and are tested annually for impairment.
Assets that are subject to depreciation or amortisation are reviewed
for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
Trade receivables
Trade receivables are measured at initial recognition at fair value
and are subsequently measured at amortised cost using the
effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit or loss
when there is objective evidence that the asset is impaired. The
allowance recognised is measured as the difference between the
asset’s carrying amount and the present value of estimated future
cash flows discounted at the effective interest rate computed at
initial recognition.
Cash and cash equivalents
For the purpose of the consolidated cash flow statement, cash
and cash equivalents comprise cash at bank and short-term
bank deposits.
Trade payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
Current and deferred tax
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
Current tax liabilities and assets are measured at the amount
expected to be paid to or recovered from the taxation authorities,
using the tax rates and laws that have been enacted, or
substantively enacted, by the reporting date.
Deferred tax
Deferred tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements. Currently enacted tax rates are used in the
determination of deferred tax.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised. Deferred tax is calculated
at the tax rates that are expected to apply in the period when the
liability is settled or the asset realised, based on tax rates that have
been enacted or substantively enacted by the period end date, and
is not discounted.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current
tax liabilities and when the deferred taxes relate to the same
fiscal authority.
Operating leases
Leases, where a significant portion of the risks and rewards of
ownership are retained by the lessor, are classified as operating
leases. Payments made under operating leases are charged to
profit or loss on a straight-line basis over the period of the lease.
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2 Significant accounting policies continued
Share-based payments
Crossrider operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for Crossrider equity instruments (options). The fair
value of the options and share awards is recognised as an employee
benefit expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number
of options that are expected to vest.
At each balance sheet date, the entity revises its estimates of the
number of options that are expected to vest. It recognises the
impact of the revision of original estimates, if any, in the income
statement, with a corresponding adjustment to equity. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (par value) and share premium
when the options are exercised.
Share capital
Ordinary shares are classified as equity. The difference between
the fair value of the consideration received by the Group and the
nominal value of the share capital being issued is classified as
additional paid in capital.
Critical accounting estimates and judgements
The preparation of consolidated financial statements under IFRS
requires the Group to make estimates and judgements that affect
the application of policies and reported amounts. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors including expectations of future
events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.
The following accounting policies cover areas that the Directors
consider require estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year:
(a) Impairment of intangible assets
Intangible assets are initially recorded at acquisition cost and are
amortised on a straight-line basis over their useful economic life.
Intangible assets that are acquired through a business combination
are initially recorded at fair value at the date of acquisition. Intangible
assets with indefinite useful life are reviewed for impairment at
least once per year. The impairment test is performed using the
discounted cash flows expected to be generated through the use of
the intangible assets, using a discount rate that reflects the current
market estimations and the risks associated with the asset. When it
is impractical to estimate the recoverable amount of an asset, the
Group estimates the recoverable amount of the cash generating
unit in which the asset belongs to (see also note 10).
(b) Capitalisation of development expenses
Research and development costs which create identifiable assets and
are expected to generate future economic benefits are capitalised,
and the remainder is expensed to the income statement. This
requires the Group to perform judgements in apportioning costs to
identifiable assets and making judgements about which assets are
expected to give rise to future economic benefits.
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Annual Report and Accounts 2016

29
(c) Presentation of net revenues
The Group makes judgements in assessing whether it has acted
as a principal or agent in transactions for selling and acquiring
advertising media space, and therefore whether it reports its
revenues gross or net respectively. The Group assesses a number
of criteria in making these judgements, including the party, who is
responsible for price setting and credit risk of the transaction, the
losses the Group would suffer for non-delivery of service as well as
the perceived and contractual relationship between the media
publisher and seller or ad network.
3 Financial risk management
The Group is exposed to interest rate risk, credit risk, liquidity risk,
currency risk and capital risk management arising from the financial
instruments it holds (see also note 17). The risk management
policies employed by the Group to manage these risks are
discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group has no
material interest-bearing financial instruments and is therefore not
exposed to changes in market rates of interest or fair value interest
rate risk.
Credit risk
Credit risk arises when a failure by counterparties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets on hand at the reporting date. The principle
credit risk is considered to result from new relationships with
customers with which the Group does not have a long working
relationship and for which reliable information as to their credit
ratings cannot be obtained. In such cases, the Group limits the
initial credit facility afforded to these customers. Cash balances are
held with high credit quality financial institutions and the Group
has policies to limit the amount of credit exposure to any financial
institution or customer.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets
and liabilities does not match. An unmatched position potentially
enhances profitability, but can also increase the risk of losses. The
Group has procedures with the object of minimising such losses,
such as by having available an adequate amount of committed credit
facilities from the ultimate shareholder and related parties, and
maintaining sufficient cash and other highly liquid current assets.
Currency risk
Currency risk is the risk that the value of financial instruments
will fluctuate due to changes in foreign exchange rates. Currency
risk arises when future commercial transactions and recognised
assets and liabilities are denominated in a currency that is not the
Group’s measurement currency. The Group is exposed to foreign
exchange risk arising from various currency exposures primarily
with respect to the Israeli New Shekel, British Pound, Euro,
Australian Dollar and Canadian Dollar. The Group’s management
monitors the exchange rate fluctuations on a continuous basis and
acts accordingly and also avoids engaging in a significant level of
transactions in currencies which are considered volatile or
exposed to risk of significant fluctuations.
30 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

4 Revenue

2016 2015
$’000 $’000

Revenue from advertising 18,291 47,406

Sale of software tool 38,241 37,229
56,532 84,635

Revenues from sale of software tool is generated mainly from the App Distribution CGU, while revenues from advertising is generated
mainly from the Media CGU.

5 Segmental information
Segments revenues and results
During the period a major restructuring has been undertaken, resulting in changes to the Group’s management reporting. The change in
reporting provides a more accurate and transparent description of activities. The Group now operates three reportable segments:

›› App Distribution – comprising the Group’s app distribution platform;

›› Media – comprising the Group’s ad network activities and associated technology platforms; and
›› Web Apps and License – comprising revenue generated from monetising Web Apps and licensing the associated technology.

Consequently, the prior year segmental results have been restated.

App Web Apps

Distribution Media and License Total
2016 2016 2016 2016
$’000 $’000 $’000 $’000

Revenue 38,241 13,783 4,508 56,532

Cost of sales (2,360) – – (2,360)
Direct sales and marketing costs (24,614) (10,303) – (34,917)
Segment result 11,267 3,480 4,508 19,255
Central operating costs (12,842)
Adjusted EBITDA (1) 6,413
Depreciation and amortisation (9,884)
Impairment of intangible assets (4,683)
Employee share-based payment charge (716)
Exceptional and non-recurring costs (862)
Operating loss (9,732)
Share of results of associates 47
Finance income 4
Finance costs (332)
Loss before tax (10,013)
Taxation (665)
Loss after taxation (10,678)

Exceptional and non-recurring costs in 2016 comprised non-recurring staff restructuring costs of $0.6 million and a $0.3 million one-time
onerous contract written-off in the period. The decrease in the employee share-based payment charge is due to reversal of charges from
previous periods for employees that left the Company during the year.

The impairment of intangible assets charge of $4,683,000 relates to the Media segment. After allocating this charge to the Media
segment, the segment result is $1,203,000 loss.
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5 Segmental information continued

App Web Apps

Distribution Media and License Total
2015 2015 2015 2015
$’000 $’000 $’000 $’000

Revenue 37,229 20,426 26,980 84,635

Cost of sales (1,854) 0 (5,534) (7,388)
Direct sales and marketing costs (25,961) (16,927) (7,835) (50,723)
Segment result 9,414 3,499 13,611 26,524
Central operating costs (16,460)
Adjusted EBITDA (1) 10,064
Depreciation and amortisation (9,370)
Impairment of intangible assets (9,132)
Employee share-based payment charge (3,407)
Exceptional and non-recurring costs (1,957)
Operating loss (13,802)
Share of results of associates (38)
Finance income 15
Finance costs (870)
Loss before tax (14,695)
Taxation (2,902)
Loss after taxation (17,597)

(1) Adjusted EBITDA is a company-specific measure which is calculated as operating loss before depreciation, amortisation, exceptional and non-recurring costs, employee
share-based payment charges and impairment of intangible assets which are considered to be one-off and non-recurring in nature, as set out in note 6. The Directors
believe that this provides a better understanding of the underlying trading performance of the business.

Exceptional and non-recurring costs in 2015 comprise non-recurring staff costs of $0.1 million and payments of contingent consideration
treated as remuneration in respect of the Ajillion and Definiti Media acquisitions expensed through the income statement of $1.9 million.

The impairment of intangible assets charge of $9,132,000 relates to the Web Apps and License segment. After allocating this charge to
the Web Apps and License segment, the segment result is $4,479,000.

Information about major customers

In 2016 and 2015 there were no customers contributing more than 10 per cent of total revenue of the Group.

Geographical analysis of revenue

Revenue by origin

2016 2015
$’000 $’000

Europe 17,297 3,641

British Virgin Islands 27,520 68,300
Asia 11,715 12,694
56,532 84,635

Geographical analysis of non-current assets

2016 2015
$’000 $’000

Europe 3,990 10,245

British Virgin Islands – 87
Asia 3,714 9,925
Total intangible assets and property, plant and equipment 7,704 20,257
32 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

6 Operating loss
Operating loss has been arrived at after charging:

2016 2015
$’000 $’000

Exceptional and non-recurring costs

Non-recurring staff costs 562 95
Onerous contract 300 –
Expensed contingent payments arising from business combinations (note 7) – 1,862
862 1,957
Auditor’s remuneration:
 Audit 147 97
 Other services 21 20
Amortisation of intangible assets 9,421 8,974
Depreciation 463 396
Impairment of intangible assets (note 10) 4,683 9,132
Employee share-based payment charge (note 7) 716 3,407
Rent payable under operating leases 459 294

Operating costs
Operating costs are further analysed as follows:

2016 2016 2015 2015

Adjusted Total Adjusted Total
$’000 $’000 $’000 $’000

Direct sales and marketing costs 34,917 34,917 50,722 50,722

Indirect sales and marketing costs 4,265 4,998 3,016 3,424
Selling and marketing costs 39,182 39,915 53,738 54,146
Research and development costs 1,299 1,661 2,539 3,500
Management, general and administrative costs 7,278 7,761 10,906 14,901
Depreciation and amortisation 1,379 9,884 1,048 9,370
Impairment of intangible assets – 4,683 – 9,132
Total operating costs 49,138 63,904 68,231 91,049

Adjusted operating costs exclude share-based payment charges, exceptional and non-recurring costs, amortisation of acquired
intangible assets and impairment of intangible assets.

7 Staff costs
Total staff costs comprise the following:

2016 2015
$’000 $’000

Salaries and related costs 7,204 9,915

Expensed contingent payments arising from business combinations (note 24) – 1,862
Employee share-based payment charge (note 18) 716 3,407
7,920 15,184
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7 Staff costs continued

The remuneration of the key management personnel of the Group, which comprises the Executive Directors and senior management
team, is set out below:

2016 2015
$’000 $’000

The aggregate remuneration comprised:

Wages and salaries 1,490 2,190
Expensed contingent payments arising from business combinations (note 24) – 912
Employee share-based payment charge 185 1,585
1,675 4,687

Details of Directors’ remuneration are set out in the Remuneration Committee report on pages 16 to 17.

8 Finance costs

2016 2015
$’000 $’000

Interest expense 51 210

Net foreign exchange and other finance expenses 281 660
332 870

9 Taxation
The Parent Company is domiciled, for tax purposes, in both the Isle of Man and the UK. The final tax charge shown below arises partially
from the difference in tax rates applied in the different jurisdictions.

The tax charge in the year 2015 of $2,902,000 includes an exceptional tax charge of $2,200,000 arising as a result of the change in
previously established corporation tax guidance in Israel relating to tax positions taken in respect of the 2013 and 2014 financial years. Of
the $2,200,000 charge, $1,200,000 has been agreed and settled in relation to profits generated in Israel in 2013, which have subsequently
been deemed to be taxable as a result of revised OECD guidance and application. The remaining $1,000,000 has arisen from a retrospective
change to the cost plus transfer pricing methodology (which was established and ratified by Israeli case law in 2015) on share option charges
incurred by subsidiaries in Israel in 2014. The Group continues to recognise a deferred tax asset of $166,000 (2015: $716,000) in respect of
tax losses accumulated in previous years.

The total tax charge can be reconciled to the overall tax charge as follows:

2016 2015
$’000 $’000

Loss before taxation (10,013) (14,695)

Tax at the applicable tax rate of 20% (2015: 20%) (2,003) (2,939)
Tax effect of:
Differences in overseas rates 976 2,233
Exceptional tax charge – 2,200
Expenses not deductible for tax purposes 1,327 1,408
Deferred tax not recognised on losses carried forward 440 –
Tax expense for previous years (75) –
Tax charge for the year 665 2,902
Analysed as:
Deferred taxation in respect of the current year 263 (463)
Current tax charge 402 3,365
Tax charge for the year 665 2,902
34 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

9 Taxation continued
The Group has maximum corporation tax losses carried forward at each period end as set out below:

2016 2015
$’000 $’000

Corporate tax losses carried forward 28,320 19,322

Details of the deferred tax asset recognised (arising in respect of losses) is set out below:

2016 2015
$’000 $’000

At the beginning of the year 716 567

(Derecognised)/recognised in the year (558) 166
Foreign exchange revaluation 8 (17)
At the end of the year 166 716

Details of the deferred tax liability recognised (arising from timing differences on intangible valuations on business combinations) is set
out below:

2016 2015
$’000 $’000

At the beginning of the year 986 1,283

Movement in the year due to temporary differences (295) (297)
At the end of the year 691 986

In addition, the Group has an unrecognised deferred tax asset in respect of the following:

2016 2015
$’000 $’000

Tax losses carried forward 28,047 10,729

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Annual Report and Accounts 2016

35

10 Intangible assets

Capitalised
software
Intellectual Customer Internet development
property Trademarks lists Goodwill domains costs Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost
At 1 January 2015 35,205 9,462 2,383 7,684 69 1,113 55,916
Additions – – – – – 1,593 1,593
At 31 December 2015 35,205 9,462 2,383 7,684 69 2,706 57,509
Additions 1,219 – – – – 744 1,963
At 31 December 2016 36,424 9,462 2,383 7,684 69 3,450 59,472
Accumulated amortisation
At 1 January 2015 (16,367) (3,241) (400) – – (141) (20,149)
Charge for the year (5,953) (1,892) (477) – – (652) (8,974)
Impairment losses (4,711) (1,341) (55) (2,316) – (709) (9,132)
At 31 December 2015 (27,031) (6,474) (932) (2,316) – (1,502) (38,255)
Charge for the period (6,528) (1,494) (483) – – (916) (9,421)
Impairment losses – – – (4,683) – – (4,683)
At 31 December 2016 (33,559) (7,968) (1,415) (6,999) – (2,418) (52,359)
Net book value
At 1 January 2015 18,838 6,221 1,983 7,684 69 972 35,767
At 31 December 2015 8,174 2,988 1,451 5,368 69 1,204 19,254
At 31 December 2016 2,865 1,494 1,968 685 69 1,032 7,113

In October 2016, the Group exercised an option to acquire the intellectual property of PC maintenance software product DriverAgent,
from eSupport.com Inc for a total consideration of $1,208,000. $150,000 from the consideration was paid in the year ending
31 December 2015 for the option, $850,000 was paid during the year ending 31 December 2016. Another $208,000 is deferred
consideration which is contingent on future results of the product.

Goodwill acquired in a business combination is allocated at acquisition to the cash generating units (‘CGUs’), or group of units, that are
expected to benefit from that business combination. Following the change in reportable segments, the Group goodwill was allocated to
the Media segment. Before recognition of the impairment charge, the goodwill has a carrying value as at 31 December 2016 of
$5,368,000 (2015: $5,368,000).

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The
recoverable amounts of the CGUs are determined from value-in-use calculations. The key assumptions for the value-in-use calculations
are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period.

At 31 December 2016, before impairment testing, the carrying value of intangible assets allocated to the Media CGU was $9,417,000,
including goodwill of $5,368,000. As a result of the reduction in the management forecasted cash flows attributable to the acquired
intangible assets, the carrying value of the goodwill has therefore been reduced to its recoverable amount of $685,000 through
recognition of an impairment loss of $4,683,000.

For the Media CGU, the Group has prepared calculations based on cash flow projections for the next five years from the most recent
budgets approved by management and extrapolated cash flows beyond this period using an estimated growth rate of 1 per cent
(2015: 1 per cent). This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount these
forecast cash flows is 25 per cent (2015: 25 per cent).

The discount rate used in the valuation of the Media CGU was 25 per cent. If the discount rate was increased by 1 percentage point the
impairment would increase by $176,000.

The discount rate used in the valuation of the Web Apps and License CGU was reduced to 10 per cent compared to 25 per cent in 2015 as
cash flows are generated from two short-term license agreements and are considered to be at low risk.
36 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

10 Intangible assets continued

The carrying value of goodwill and intangible assets by CGU less provisions for impairment is set out as follows:

Web Apps App

and License Media Distribution Total
$’000 $’000 $’000 $’000

Carrying value before impairment losses at 1 January 2016 974 9,417 1,405 11,796
Provisions for impairment – (4,683) – (4,683)
Net book value at 31 December 2016 974 4,734 1,405 7,113

At 31 December 2015, before impairment testing, the carrying value of intangible assets allocated to the Web Apps and License CGU was
$17,423,000, including goodwill of $2,316,000. Due to the significant reduction in advertising volumes that management believes can be
achieved in the web extensions business in 2016 the group has revised its cash flow forecasts for this CGU. The carrying value of the
intangible assets of the Web Apps and License CGU has therefore been reduced to its recoverable amount of $8,291,000 through
recognition of an impairment loss of $9,132,000, of which $2,316,000 has been allocated to goodwill.

Web Apps App

and License Media Distribution Total
$’000 $’000 $’000 $’000

Carrying value before impairment losses at 1 January 2015 17,423 10,894 69 28,386
Provisions for impairment (9,132) – – (9,132)
Net book value at 31 December 2015 8,291 10,894 69 19,254

The Group tests the useful economic life of the intangible asset whenever events or changes in circumstances indicate that the useful
economic life may need to be changed. The Web Apps initial intellectual property and customer lists were fully amortised in the year
ending 31 December 2016 due to a change in management assumptions with the expected useful life of these assets. If the management
assumption was not changed, the amortisation attributed to the Web Apps intellectual property and customer lists would be $3,865,000
instead of $5,807,000.

11 Property, plant and equipment

Furniture,
fixtures and
Computer office Leasehold
equipment equipment improvements Total
$’000 $’000 $’000 $’000

Cost
At 1 January 2015 808 345 654 1,807
Additions 109 29 82 220
At 31 December 2015 917 374 736 2,027
Additions 78 3 27 108
Disposals (19) (98) (313) (430)
At 31 December 2016 976 279 450 1,705
Accumulated depreciation:
At 1 January 2015 (417) (52) (160) (629)
Charge for the period (158) (35) (203) (396)
Exchange differences 1 – – 1
At 31 December 2015 (574) (87) (363) (1,024)
Charge for the period (150) (50) (263) (463)
Disposals 11 49 311 371
Exchange differences 2 – – 2
At 31 December 2016 (711) (88) (315) (1,114)
Net book value
At 1 January 2015 391 293 494 1,178
At 31 December 2015 343 287 373 1,003
At 31 December 2016 265 191 135 591
 STRATEGIC
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Crossrider plc
Annual Report and Accounts 2016

37

12 Trade and other receivables

2016 2015
$’000 $’000

Trade receivables and accrued income 5,604 12,973

Prepayments 391 995
Other receivables 1,955 2,312
7,950 16,280

The ageing of trade receivables that are past due but not impaired is shown below:

2016 2015
$’000 $’000

Between 1 and 30 days 685 1,620

Between 31 and 60 days 219 258
More than 60 days 247 176
1,151 2,054

The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.
The exposure of the Group to credit risk and impairment losses in relation to trade and other receivables is set out in note 17 of the
consolidated financial statements.

13 Cash and cash equivalents

2016 2015
$’000 $’000

Cash in bank accounts 59,857 71,172

Bank deposits 12,207 164
72,064 71,336

The carrying value of these assets represents a reasonable approximation to their fair value.

14 Trade and other payables

2016 2015
$’000 $’000

Trade payables 1,879 2,963

Accrued expenses 3,367 7,908
Employee liabilities 709 1,744
Other payables 1,141 2,701
7,096 15,316

The Group’s management consider that the carrying value of trade and other payables approximates their fair value. The Group has
financial risk management policies in place to ensure that all payables are paid within the credit timeframe and no interest has been
charged by any suppliers as a result of late payment of invoices.

15 Shareholder’s equity

2016 2015
Number Number
of shares of shares

Issued and paid up ordinary shares of $0.0001 148,496,073 148,496,073

The issued share capital of the Company on incorporation was 10,000 ordinary shares of $1.00 par value.

During the year a total of nil new ordinary shares of $0.0001 par value were issued for cash in relation to share option schemes resulting
in cash consideration of $nil (2015: $18,000).
38 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

15 Shareholder’s equity continued

During the year a total of 1,250,000 ordinary shares of $0.0001 par value were purchased by the Company for a total cash consideration
of $994,952 and are held in treasury at the reporting date (2015: $5,130,920).

As at 31 December 2016, the Company held in treasury a total of 7,451,423 ordinary shares of $0.0001 par value (2015: 6,201,423).

The following describes the nature and purpose of each reserve within owner’s equity:

Reserve Description and purpose

Additional paid in capital Share premium (i.e. amount subscribed or share capital in excess of nominal value)
Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

16 Interests in associates
In September 2015, the Group acquired 16.67 per cent of the share capital of Clearvelvet Trading Limited for a total consideration of
$850,000, of which $350,000 was paid in 2016 on completion of certain milestones. Although the Group holds less than 20 per cent of the
equity shares of the voting power at shareholder meetings, the Group exercises significant influence by virtue of its contractual right to
appoint one of four directors to the Board of Directors of Clearvelvet Ltd and to veto certain significant trading and investment decisions.

2016 2015
$’000 $’000

Interest in associates at the beginning of the year 812 –

Investment in associates in the year – 850
Share of results 47 (38)
Interest in associates at the end of the year 859 812

Aggregated amounts relating to Clearvelvet Limited are as follows:

2016 2015
$’000 $’000

Total current assets 6,117 1,266

Total current liabilities 5,467 1,107
Revenues 11,793 1,805
Profit (loss) 288 (230)

In January 2016, the Company signed a loan facility agreement with Clearvelvet Trading Limited in order to support Clearvelvet’s working
capital requirements. As at 31 December 2016, the loan amount is $720,000 (2015: nil). Clearvelvet’s trade debtor balance is used as a
guarantee for the loan.

17 Financial instruments
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and
processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect
of these risks is presented throughout this financial information.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

›› Trade and other receivables

›› Trade and other payables
›› Cash and cash equivalents
›› Loans receivable
›› Deferred consideration
STRATEGIC
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FINANCIAL

STATEMENTS
Crossrider plc
Annual Report and Accounts 2016

39

17 Financial instruments continued

Financial assets
The Group held the following financial assets:

2016 2015
$’000 $’000

Trade receivables and accrued income 5,604 12,973

Other receivables 1,955 2,312
Cash 72,064 71,336
79,623 86,621

Financial liabilities
The Group held the following financial liabilities:

2016 2015
$’000 $’000

Amortised cost
Trade payables 1,879 2,963
Other payables and accrued expenses 4,611 12,353
Deferred consideration (see note 24) 403 1,589
6,893 16,905

The Group’s Directors monitor and manage the financial risks relating to the operation of the Group. These risks include market risk
(including foreign currency risk and interest rate risk), credit risk and liquidity risk.

Market risk
(a) Foreign currency risk management
The carrying amounts of the Group’s foreign currency-denominated monetary assets and monetary liabilities at the reporting date are
as follows:

Liabilities Assets
2016 2015 2016 2015
$’000 $’000 $’000 $’000

Israeli New Shekel 473 1,087 703 1,696

Euro 761 2,747 2,300 5,988
British Pound 209 1,845 48 2,874
Australian Dollar – – 11 16
Canadian Dollar – – – 54
Romanian Leu 38 – 107 –
1,481 5,679 3,169 10,628

A 10 per cent weakening of the United States Dollar against the following currencies at 31 December would have increased/(decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain
constant. For a 10 per cent strengthening of the United States Dollar against the relevant currency, there would be an equal and opposite
impact on the profit and other equity.

Equity Profit or loss

2016 2015 2016 2015
$’000 $’000 $’000 $’000

Israeli New Shekel 23 61 23 61

Euro 154 324 154 324
British Pound (16) 103 (16) 103
Australian Dollar 1 2 1 2
Canadian Dollar – 5 – 5
Romanian Leu 7 – 7 –
169 495 169 495
40 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

17 Financial instruments continued

(b) Interest rate risk management
At the reporting date, the interest rate analysis of financial instruments was:

2016 2015
$’000 $’000

Fixed rate financial instruments

Financial assets 72,064 71,336
72,064 71,336

Any increase/(decrease) in interest rates will have no effect on results and equity of the Group, because all financial instruments are fixed rate.

Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was:

2016 2015
$’000 $’000

Trade and other receivables 5,738 13,784

Cash at bank 59,857 71,172
Bank deposits 12,207 164
Receivables from related companies 1,821 1,501
79,623 86,621

Before accepting a new customer, the Group assesses each potential customer’s credit quality and risk. Customer contracts are drafted
to reduce any potential credit risk to the Group. Where appropriate, the customer’s recent financial statements are reviewed.

Trade receivables are regularly reviewed for bad and doubtful debts. The Group holds a provision of $230,000 at 31 December 2016
against bad and doubtful debts (2015: $337,000). At 31 December 2016, the Group had trade receivables of $1,151,000 (2015: $2,054,000)
that were past due but not impaired. The ageing analysis of these past due receivables is set out in note 12.

In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from
the date the credit was initially granted up to the reporting date. The Group does not hold any collateral as security. Impairments of trade
receivables are expensed as operating expenses. The fair value of receivables equates to their book value. The Group does not collect
external credit ratings for customers but uses its own methods for determining creditworthiness.

The Group and Company seek to limit the level of credit risk on cash and cash equivalents by depositing funds with banks that have high
credit ratings.

Liquidity risk management

The Group’s liquidity risk is monitored using regular cash flow reporting and projections to ensure that it is able to meet its obligations as
they fall due.

The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on
the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table
includes both interest and principal cash flows.

Carrying Contractual 3 months Between Between More than

amounts cash flows or less 3-12 months 1-5 years 5 years
2016 $’000 $’000 $’000 $’000 $’000 $’000

Trade and other payables 6,470 6,470 6,265 205 – –

Payables to related parties 20 20 20 – – –
Deferred consideration 403 503 – 253 250 –
6,893 6,993 6,285 458 250 –
 STRATEGIC
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FINANCIAL
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Crossrider plc
Annual Report and Accounts 2016

41

17 Financial instruments continued

Carrying Contractual 3 months Between Between More than

amounts cash flows or less 3-12 months 1-5 years 5 years
2015 $’000 $’000 $’000 $’000 $’000 $’000

Trade and other payables 13,740 13,740 12,445 1,090 205 –

Payables to related parties 1,576 1,576 1,576 – – –
Deferred consideration 1,589 1,644 – 1,439 205 –
16,905 16,960 14,021 2,529 410 –

18 Employee share-based payments

Options have been granted under the Group’s share option scheme to subscribe for ordinary shares of the Company. At 31 December
2016, the following options were outstanding (2015: 14,481,158):

Number of shares Subscription price

Group Grant date under option per share

Group 2 29 May 2014 1,182,790 $0.449

Group 3 29 May 2014 2,413,819 $0.538
Group 7 30 September 2014 854,940 $1.662
Group 8 21 April 2015 633,062 $1.523
Group 9 18 November 2015 200,000 $0.820
Group 10 5 January 2016 742,500 $0.820
Group 11 31 May 2016 2,000,000 $0.402
Group 12 26 October 2016 2,232,272 $0.445
Total 10,259,383

Vesting conditions
Group 2: 50 per cent at the end of the first year following the grant date. 12.5 per cent on a quarterly basis during 12 quarters
period thereafter.

Groups 3–12: 25 per cent at the end of the first year following the grant date. 6.25 per cent on a quarterly basis during 12 quarters
period thereafter.

The total number of shares exercisable as of 31 December 2016 was 3,840,679 (2015: 8,312,028).

The weighted average fair value of options granted in the year using the Cox, Ross and Rubinstein’s Binomial Model (the ‘Binomial Model’)
was $0.26. The inputs into the Binomial Model are as follows:

2016 2015
$’000 $’000

Early exercise factor 100%-150% 100%-150%

Fair value of Group’s stock $0.40-$0.80 $0.75-$1.51
Expected volatility 60% 60%
Risk-free interest rate 0.25-1.89% 0.5-1.93%
Dividend yield – –
Forfeiture rate 7%-14% 4%-13%

Expected volatility was determined based on the historical volatility of comparable companies.

Forfeiture rate is assumed to be 7 to 14 per cent for senior management and 26 per cent for other employees.

The risk-free interest rate was estimated based on average yields of UK government bonds.
42 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

18 Employee share-based payments continued

The Group recognised total share-based payments relating to equity-settled share-based payment transactions as follows:

2016 2015
$’000 $’000

Share-based payment charge 716 3,407

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

2016 2015
Weighted Weighted
average average
exercise Number of exercise Number of
price options price options

At the beginning of the year $0.66 14,481,158 $0.577 13,869,357

Granted $0.51 5,338,272 $1.42 1,325,500
Lapsed $0.56 (9,560,047) $0.538 (680,665)
Exercised – – $0.538 (33,034)
At the end of the year $0.66 10,259,383 $0.66 14,481,158

The options outstanding at 31 December 2016 had a weighted average remaining contractual life of 7.9 years (2015: 8.5 years).

19 Earnings per share

Basic loss/earnings per share is calculated by dividing the loss/earnings attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.

2016 2015
cents cents

Basic and diluted (7.6) (11.9)

Adjusted basic 2.7 4.8
Adjusted diluted 2.7 4.6

Adjusted earnings per share is a non-GAAP measure and therefore the approach may differ between companies. Adjusted earnings have
been calculated as follows:

2016 2015
$’000 $’000

Loss for the year (10,678) (17,597)

Post-tax adjustments:
Employee share-based payment charge 823 3,343
Exceptional and non-recurring costs 774 1,941
Amortisation on acquired intangible assets 8,208 8,025
Impairment of intangible assets 4,683 9,132
Exceptional tax charge – 2,200
Adjusted profit for the year 3,810 7,044

Number Number

Denominator – basic:
Weighted average number of equity shares for the purpose of earnings per share 141,068,557 147,779,641
Denominator – diluted:
Weighted average number of equity shares for the purpose of diluted earnings per share 141,182,911 152,107,062

The diluted denominator has not been used where this has anti-dilutive effect. Basic and diluted loss per share are therefore the same
for reporting purposes.

The difference between weighted average number of ordinary shares used for basic earnings per share and the diluted earnings per share
is 114,354, being the effect of all potentially dilutive ordinary shares derived from the number of share options granted to employees.
 STRATEGIC
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FINANCIAL
STATEMENTS
Crossrider plc
Annual Report and Accounts 2016

43

20 Subsidiaries

Name Country of incorporation Principal activities Holding %

BestAd Hi Tech Media Limited (2) Israel Development technical support and marketing services 100
Crossrider Advanced Technologies Israel Development services and technical and marketing support 100
Limited (2)
Crossrider (Israel) Limited (2) Israel Provision of marketing services to related parties 100
Crossrider Technologies Limited Cyprus Licensing of IP software and agency services to related parties 100
(formerly Market Connect (Cyprus)
Limited)
Crossrider Sports Limited (2) United Kingdom Provision of consulting services 100
Reimage Limited (1) Isle of Man Development and sale of the ‘Reimage’ software tool 100
Reimage Limited Cyprus Consulting, market research and software development services 100
R.S.F. Remote Software Fixing Israel Provision of development, technical support and marketing 100
Limited (2) support services to its parent company
Crosspath Trading Limited British Virgin Islands Performance of commercial activity through the licensing of 100
technology from Crossrider Technologies Ltd
Blueroad Trading Limited Cyprus Provision of agency services to Crosspath Limited 100
Frontbase Trading Limited Cyprus Provision of agency services to Crosspath Limited 100
Crossrider ROM SRL Romania Provision of marketing and development services 100
Definiti Media Ltd Israel Providing digital advertising services for mobile platforms 100

(1) Re-domiciled from British Virgin Islands on 8 September 2016.

(2) Indirect shareholding.

The Group has been formed from a series of common control transactions which have been accounted for using merger accounting, and
acquisitions from third parties which have been accounted for using the acquisition method.

21 Related party transactions

The Group is controlled by Unikmind Holdings Limited, incorporated in the British Virgin Islands, which owns 73 per cent of the
Company’s shares. The controlling party is the Solidinsight Trust, established under the laws of the Isle of Man. Mr Teddy Sagi is the sole
ultimate beneficiary of the Solidinsight Trust.

(a) Related party transactions

The following transactions were carried out with related parties:

2016 2015
$’000 $’000

Revenue from common controlled company 5,034 4,709

Technical support services to end customers provided by common controlled company (2,105) (1,226)
Payment processing services provided by common controlled company (300) (774)
Office rent expenses to common controlled companies (82) –
Revenue from equity investments 100 –
2,647 2,709

(b) Receivables owed by related parties (note 17)

2016 2015
Nature of transaction $’000 $’000

Parent Company Unpaid share capital 10 10

Equity investments Loan and trade 799 –
Companies related by virtue of common control Trade 1,022 1,501
1,831 1,511
44 Crossrider plc
Annual Report and Accounts 2016

Notes to the consolidated financial statements

continued

21 Related party transaction continued

(c) Payables to related parties (note 17)

2016 2015
Nature of transaction $’000 $’000

Amount owed to Director – 1,151

Companies related by virtue of common control Other 20 425
20 1,576

22 Operating leases

2016 2015
$’000 $’000

Due less than 1 year 553 619

Due between 1 and 5 years 868 1,052
1,421 1,671

The table above summarises the minimum commitments under the Group’s office rental agreements.

23 Contingent liabilities
The Group had no contingent liabilities as at 31 December 2016.

24 Deferred consideration
(a) Acquisition of Definiti Media Limited
The consideration for the acquisition of Definiti Media Ltd in May 2014 included $2,489,000 deferred consideration. Of this, $845,000 was
repaid during the year ending 31 December 2014 and $746,000 was repaid during the year ending 31 December 2015. The remaining
amount was repaid during the year ending 31 December 2016.

In addition, $1,427,000, included as part of the acquisition arrangements, has been recognised directly in the income statement during
the year ending 31 December 2015 as set out in note 7.

(b) Acquisition of AjillionMax

The consideration for the acquisition of certain assets of AjillionMax Limited in May 2014 included $654,000 deferred consideration. Of this,
$104,000 was repaid during the year ending 31 December 2014, $156,000 was repaid during the year ending 31 December 2015, $189,000
was repaid during the year ending 31 December 2016 and the remaining amount will be repaid during the year ending 31 December 2017.

In addition, $435,000, included as part of the acquisition arrangements, has been recognised directly in the income statement during the
year ending 31 December 2015.

(c) Investment in Clearvelvet Trading Ltd

In September 2015, the Group acquired 16.67 per cent of the share capital of Clearvelvet Limited for a total consideration of $850,000, of
which $350,000 was paid in 2016 on completion of certain development milestones.

(d) Acquisition of DriverAgent intangibles

In October 2016, the Group acquired the intellectual property of PC maintenance software product, DriverAgent, from eSupport.com, Inc
for a total consideration of $1.2 million. The consideration included $0.2 million of deferred consideration which is contingent on future
results. Of this, $48,000 is expected to be repaid during the year ending 31 December 2017. The remaining amount is expected to be
repaid during the year ending 31 December 2018.

25 Subsequent events
On 13 March 2017 the group acquired CyberGhost SRL, a company incorporated in Romania, for initial consideration of €6.1 million and
potential maximum consideration of €3 million. CyberGhost is one of the leading cyber security SaaS providers, with a focus on the provision
of Virtual Private Network (“VPN”) solution. The acquisition meets the group’s previously announced intention to strengthen its B2C market
reach, allowing it to operate as a digital distribution and product platform, utilising its existing technology and intellectual property.

Due to the acquisition being executed on the same date as the authorisation of the financial statements the detailed acquisition accounting
has not yet been undertaken and is therefore incomplete. It is anticipated that the acquisition will be accounted for in full in the interim
financial statements for the period ending 30 June 2017.
Shareholder information and advisers

Shareholder information, including financial results, news and information on products and services, can be found at www.crossrider.com.

Independent Auditor Broker

BDO LLP Shore Capital Stockbrokers Limited
55 Baker Street Bond Street House
London W1U 7EU 14 Clifford Street
London W1S 4JU
Nominated Advisor
Shore Capital & Corporate Limited Registrars
Bond Street House Computershare Investor Services (Jersey) Limited
14 Clifford Street Queensway House
London W1S 4JU Hilgrove Street
St Helier
Investor Relations Jersey JE1 1ES
Vigo Communications
180 Piccadilly Registered Office
London W1J 9HF Sovereign House
14-16 Nelson Street
Corporate Legal Advisers Douglas
Berwin Leighton Paisner LLP Isle of Man IM1 2AL
Adelaide House
London Bridge Stock exchanges
London EC4R 9HA The Company’s ordinary shares are listed on the London Stock
Exchange (AIM) under the symbol ‘CROS’. The Company does not
maintain listings on any other stock exchanges.
Crossrider plc
Interchange Triangle
Stables Market
Chalk Farm Road
London NW1 8AB
Tel: +44 (0) 203 355 7926

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